Banks’ services in Vietnam were monotonous, its quality was not high, yet oriented customer needs and focused on traditional banking services. Banks raising capital primarily as a deposit account for 94% of capital mobilization and credit is the main activity of banks, accounting for over 80% of total income.
The Marketing Saigon Newspaper has done a customer research survey about commercial banks and banking services which have satisfied customers in 2007 and quarter 1/2008. The survey has been done on the top ten commercial banks which
had good business activities. Five groups of banking services which are voted by customers consist of:
- Treasury includes opening deposit and saving accounts, checking accounts and financial information, selling and buying foreign currencies.
- Remittance or payment that are transfer money, withdrawal, remittance, payment and collection in domestic and international transactions, credit cards and visa debits.
- Lending and local sponsor services consist of lending for individual consumption such as buying individual instruments, building and repairing real properties and estates, sponsor educational fees and studying abroad, local and international credit cards, lending for production and business under short term, middle and long term, guarantee and leasing.
- Financing international businesses are services such as providing money for import and export activities.
- Consulting services can be listed such as capital market, mobilizing capital by issuing bonds and stocks, doing stock exchanges, restructure services and so on.
7 0
VietCombank
Asia commercial bank Dong A Bank Agribank Vietinbank Sacombank BIDV
Eximbank Techcombank Orient commercial bank Other banks
1.3%
2.6%
2.9%
5.0%
7.1%
19.3%
9.3%
9.5%
18.8%
10.5%
13.7%
Figure 4.5: Top 10 banks are traded the best
Concerning top 10 bank, customers’ satisfaction concentrates on 3 group banking services including treasury made up 48,3%;
Remittance or payment constituted 40,1%; Third group are lending and local sponsor services is only 7,8% and ratio of customer selecting financing international business is only 3,9%.
Consulting services are not high appreciated. As showing on the result of customer survey, clients are not supplied more service relating to domestic consumption and international finance. That is the opportunity for commercial banks who need to invest and develop much more banking products in those areas.
60%
48.3%
Remittance/payment Lending and local sponsor services
Financing international business
Linear (Lending and local sponsor services 40%
30%
20%
10%
0%
40.1%
7.8%
3.7% 0.0%
Figure 4.6: Customer's satisfactory ratio
Because Vietnamese commercial banks have not diversify the types of banking services, that made the commercial banks in Vietnam is primarily based tools rates to compete to attract customers.
However, this instrument will only work in certain limits.
4.3 CAR REGULATIONS IN VIETNAMESE BANKING SYSTEM
In order to perform the WTO’s commitments to opening banking service area, SBV have issued many rules relating to management and executive banking operation, applying international standards in banking management. Concerning capital adequacy issue, SBV issued some guidelines which are in accordance with the standards of the Basel I including
- Decision 457/2005/QD-NHNN of April, 15, 2005 promulgating the regulation on safety assurance ratio in activities of credit
institutions. According to this Decision, Vietnamese banking system was improved a united standards adaptable with Basel I , in which
State Bank decided risk weighted ratio of Credit asset group of commercial banks when evaluated credit risks.
- Decision No. 03/2007/QD-NHNN of January 19th, 2007, amending and supplementing a number of articles of the regulation on assurance of safety ratios in operation of credit institutions, issued together with the State Bank Governor's Decision No.
457/2005/QD-NHNN of April 19, 2005.
- Decision No. 34/2008/QD-NHNN of December 5, 2008, amending and supplementing a number of articles of the regulation on assurance of safety ratios in operation of credit institutions, issued together with the State Bank Governor's Decision No.
457/2005/QD-NHNN of April 19, 2005.
- Circular 15/2009/TT concerning the reduction of maximum ratio of short term capital to lend middle and long term.
- Decision 797 / 2002/QD-NHNN of July 29, 2002 amending some articles of the Provisions on shareholders, shares, stocks and the charter capital of commercial banks share of the State and the Decision No. 1122/2001/QD- State Bank of Vietnam on September 4, 2001 the State Bank.
Giang (2009) said that the upon CAR guidelines of SBV which almost met standards of CAR in the Basel I significantly focused on credit risk management according to the Basel I’s calculation, but did not mention on credit rating. In addition, the SBV’s regulations still did not refer to operation risk and market risk and standards of the Basel II were not applied in the SBV’s guidelines.
When looking in the capital adequacy ratio, CAR of Vietnamese commercial banks are more an more better and continuously increase after the year of 2005.
Table 4.3: CAR of Vietnamese commercial banks from 2003 to 2008
200
3 200
4 200
5 200
6 200
7 200
STB 10.06 10.49 15.40 11.82 11.07 12.168
VCB 7.00 9.57 12.28 12.25 8.90
Vietinbank 6.08 6.30 6.07 5.18 11.62 12.00
EIB 19.09 34.12 54.89
ACB 8.09 12.10 10.89 16.19 12.44
TCB 10.19 15.72 17.28 14.30 13.99
OCB 16.84 20.78 21.64
NAB 17.17 29.25 24.68 29.81
Figure 4.7: CAR chart of Vietnamese commercial banks
60%
50%
40%
30%
20%
10%
0%
STB VCB Vietinbank EIB ACB TCB OCB NAB
2003 2004 2005 2006 2007 2008
(Source: banking annual report).
Chapter Five:
Capital adequacy ratio measurement analysis in ABBank